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VIEWPOINT: Entrepreneurs Deserve To Retire

While entrepreneurs may be exceptional in building a small or large business, that expertise, tenacity and personality do not guarantee them a successful retirement

Research shows that between 70% and 80% of small businesses in South Africa fail and fewer than 50% survive beyond five years.

But entrepreneurship is not just about start-ups. Richemont, Nike, Volkswagen, Oracle, Facebook and Walmart are household names. While publicly traded, they are still classified as family-owned businesses with generations of entrepreneurs. And the stories of failures in these well-established companies abound. VW’s emissions scandal cost them an estimated $30 billion. The Samsung 7s went up in flames. And then the world changes.

Uber becomes the biggest taxi company without owning a vehicle. Airbnb becomes the biggest ‘hotel’ group, but without a single hotel. Tesla changes the car industry and creates a spin-off of a whole new generation of entrepreneurs.

So how does this fit into a personal financial plan? Building and protecting the right assets is critical.

Broadly, it’s been motivated that we have four different types of assets in a financial planning framework.

Intellectual: This is the ability to generate income through one’s IQ, EQ, expertise, experience, innovative abilities, leadership skills, and in fact physical capacity. These are the intangibles that can generate cash flows and tangible assets. Some numbers suggest that the lifetime value of a young professional can be R60 million plus. You’re your biggest asset, especially in the early years. Apart from a healthy lifestyle, these can also be protected with anything from dread disease to income protection, and disability and life insurance solutions.

Business: These are the cash flows one generates as an employee and shareholder and ultimately a capital value on full or partial exit from the business. Until these assets are converted into retirement capital, they are subject to the challenges of business risk. But these are just a component of building sustainable and real value.

Personal: These are our homes, cars, furniture, artwork and an assortment of toys. They are normally depreciating assets with high costs of maintenance, even though we like to argue otherwise. Generally, they also don’t generate earnings to retire on if we are going to continue living in them, driving them, or just admiring them.

Retirement: These are the assets or investments that need to be structured, protected and balanced in a proper financial plan to fund the expected or aspirational lifestyle on retirement.


Understand your financial planning framework and objectives for each class of asset.

Don’t confuse or ‘bet the house’ on your business or personal assets and neglect your retirement.

Protect your business assets and personal wealth with appropriate assurance for when ‘business or life happens’.

Invest the wealth from business assets prudently whether for business growth or building personal or retirement assets.

Evaluate the legal structures, estate planning, tax planning and cash flow planning options available to you.

Seek professional financial advice in these areas and don’t forget to protect yourself from yourself.

And start early.

Wealth Advisor

Mike Lledo CA(SA) is an Independent Financial Services Consultant